TCS @3120 on 08/04/2021

This may be sold now if in stock, however, it seems worth buying ta under 2865/- for medium/long term till the next advice…ref 145/385/2035/1091/1200/1200/1000/1000/qIIIfy21).

N.B. This has been good scrip to hold and has given good performance over the last five years gaining more than double the in terms of price while its sales revenue have been up by just 1.6 times and PAT is up by about 1.50 times. Now what may have made price of this go up is expanded liquidity here as well as all over the world. In India the liquid cash is more by 5.17 lac crs. This enhanced liquidity must have contributed to enhanced revenues also and to profits. In such times, to build castles is foolhardy. This liquidity will have to be mopped up in normal times because the govts can’t harm the interests of savers and transfer wealth to borrowers on a continuous basis by reducing interest rates and creating inflationary conditions. So we may easily expect normalcy to return and so would the share prices return to normal range. A few more results will show where we stand, lets patiently wait and not stick our necks out.

Liquidity does help companies to perform better as it provides a more congenial atmosphere but it does not raise the level of efficiency at company level so the long term bets on back of liquidity are fraught with risk. When sales and profit rise then the stock prices should rise more moderately because higher profitability and sales growth tend to get tougher to increase further because of room available for growth may not have increased and competitors are also at work to snatch away the sales and therefore the profits. Higher share price however permanently pushes up carrying cost of the investor.

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